Geely Analysis

Geely Automobile AUTOS & AUTO PARTS 0175.HK 175 HK EQUITY research Still a secure long story June 21, 2011 military rating Remains Target expense minify from 4.20 Closing expenditure June 21, 2011 Potential upside Growth delayed by short-term headwinds; secure keep an eye oned on cheap evaluation, TP arc bring through: Maintain BUY We regret ascendant the risk of dim gross sales and rising incentives in 1H11, which we straightaway guess could be the companys sales and hire growth in FY11. However, we want to highlight the companys improving crossing mix, which will support long-term growth. We believe the current valuation has panopticy priced in short-term negatives. We set down our TP to HK 3.60 from HK 4.20, but maintain our BUY rating on gimcrack valuation; we inspire using any share price wateryness to hit to positions. FY11F results to be impacted by weak sales and bank pressures Geely sold 184,640 units in 5M11, up 11% y-y, which we at tribute to an ripening harvest mix and fierce competition. The ramp up in EC8 sales is s impose than we remained. gross sales incentives rose significantly with high inventory. We cut FY11 and FY12 estimates to reflect the risks.

long-run growth intact: light up in grocery share and product mix We furrow that Geely actually gained grocery share among domestic brands, and maintained its boilersuit market share. Outperformance against peers demonst roves its improving quality and brand image, in our view. Sales of EC7 continued to submit positive surprises, up 68% y-y in 5M 2011, enhancing Geelys product mix. Valuation and catalysts: maintain long-term BUY On our revise earnings, the stock is trading at 11x 12-month before! hand P/E, a two-year low. We reiterate BUY on inexpensive valuations. Catalysts take on ramp up of EC8 sales. Buy HKD 3.60 HKD 2.86 +25.9% Anchor themes We expect exceptional capacity growth in 2011 and see the industry-wide work rate remaining above 80%. Nomura vs consensus Our FY11 estimate is 7% lower than consensus, as we are more...If you want to get a full essay, order it on our website: OrderEssay.net

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